Wholesalers, iBuyers, local buyers: who is on the other end of the phone

The phone rings. The caller knows your address and roughly what you paid, and he wants to buy the house for cash. Who is he?

Through most of the nineties and well past it I closed for all three kinds, and they behave differently at every stage, from the first call to the day the deed records. If you can sort them in the first ten minutes you save yourself weeks.

The wholesaler

A wholesaler doesn't buy houses. He gets houses under contract, cheap, and then sells the contract to an investor for a fee. His offer is low because it has to leave room for his fee and for the real buyer's margin. His contract is long on inspection days and short on commitment: thirty days to inspect, an assignment clause, and a deposit that's small, or that never quite lands at escrow.

The tell is proof of funds. Ask for a bank statement in the name on the contract. A wholesaler can't produce one, because the money belongs to somebody he hasn't found yet. What you get instead is a "funding letter" from a lender you've never heard of, or silence.

The wholesaler often knows nothing about the house. He's never seen it. He's working from a list. A buyer who has actually walked your street can tell you which neighbor has the new roof.

California finally got around to regulating this. A law passed in 2024 and in force since the following January requires a wholesaler to tell you in writing, up front, that he intends to assign the contract rather than buy it, and in most cases to hold a real estate license if he's doing it for a fee. I'm not a lawyer and this isn't legal advice, so read the DRE consumer information for the current version rather than taking my word for it, or his.

The iBuyer

An iBuyer is a national company that makes an offer from an algorithm, charges a service fee instead of a commission, and re-sells the house lightly touched. Their offers were closer to market than a flipper's and their contracts were clean. I liked closing them, if I'm honest.

As far as I can tell they've mostly pulled out of the Bay Area, or narrowed what they'll buy, and I think the reason is arithmetic rather than anything sinister. The model works when a house can be bought, repainted and resold in a few months with a predictable spread. Peninsula and South Bay houses are expensive, so each one ties up a great deal of capital for a thin percentage, and they're old, so the "light touch" turns into a foundation report and a permit history nobody can find. A national algorithm can't price a bad crawl space in Sunnyvale, so they stopped trying, or kept to the newer subdivisions where they could.

If an iBuyer does call you, the offer is real and the contract is fine. Just don't expect them to want a 1950s house in Redwood City with a bedroom somebody added on.

The local buyer, and the sites that find one

The third kind is a local investor, or a small company of them, who buys with their own money or a hard-money line and either flips or holds. Their offers vary more than the other two because their costs vary. Their contracts are usually a standard form or a short custom one, with a real deposit and a reasonable inspection window.

Some of the calls you get come through a lead-matching site rather than from the buyer directly. Nothing wrong with that on its own; it's how a lot of local buyers find houses now. What matters is who you end up contracting with. A site that says it connects homeowners with local buyers rather than a national iBuyer is describing the model I just went through, and the person on the phone is the one to check, not the website.

Checking a license, and what it doesn't tell you

The DRE public license lookup takes a name or a license number and gives you status, expiration date, disciplinary history, and the broker the license hangs under. Two minutes. Do it for anyone who says they're an agent or a broker.

An unlicensed buyer isn't automatically a problem. A person buying a house for their own account doesn't need a license. Most of the small local investors I closed for weren't licensed and were perfectly fine to deal with. The problem is somebody acting as an agent, or marketing someone else's money or contract, without a license to do it. The lookup can't sort that out for you; the proof-of-funds question, below, does most of that work.

Red flags that aren't about price

Every so often the call isn't from a buyer at all. The FTC's page on mortgage relief scams describes the pattern: someone who says they can stop a foreclosure if you sign the house over to them, or pay them up front, or stop paying your lender and pay them instead. In California the Department of Financial Protection and Innovation licenses lenders and takes complaints about the people pretending to be one.

Deed theft is the one that kept me up at night. It's a document, notarized or forged, that transfers your house to a stranger, sometimes dressed up as a "temporary" transfer while they "help" with the loan. Never sign a deed at a kitchen table. A deed gets signed in front of a notary at escrow, on a closing date, with a closing statement that shows where the money is. Anything else, hang up and report it at ReportFraud.ftc.gov.

The three-question phone script

"Are you buying this yourself, or will you assign the contract to someone else?"

"Can you send me proof of funds in the name that will be on the contract?"

"What is your after-repair value for my house, and what is your repair number?"

The first one flushes out the wholesaler, and the third tells you whether the offer was built or guessed at, but the second is the one I'd spend time on. A real answer is a PDF of a bank or brokerage statement, dated inside the last month or two, with the account holder's name matching the buyer on the contract and a balance that covers the price with room for closing costs; account numbers blacked out is fine and normal. The dodge sounds like "my partner handles that," or "we're funded by a private lender, I can get you a letter," or a statement in the name of an LLC you've never heard of that isn't the one on the offer. If you get the dodge twice, you have your answer about which kind of caller you have.